06.30.2016

National – Today, the U.S. Department of Housing and Urban Development (HUD) announced significant improvements to their delinquent mortgage sales program.  The changes include:

• Making principal reduction the first strategy in modification processes
• Increased non-profit participation - with a goal of tripling the number
• Far greater provisions for transparency in the sale process
• A commitment to work with local governments and non-profits on targeted sales

The new program rules will result in more mortgage pools being sold to non-profits, more foreclosures avoided, and more vacant property turned into affordable housing. Community groups now plan to work city by city, and state by state, to make sure that HUD sells delinquent mortgage pools to mission-driven purchasers. 

These reforms come on the heels of an aggressive community pressure campaign led by the Center for Popular Democracy and Local Progress that put HUD Secretary Julián Castro in the spotlight for running a program that has benefitted Wall Street at the expense of communities.  HUD’s “Distressed Asset Sales Program” (DASP) has been conducting bulk auctions of delinquent mortgages to the highest bidder, which has meant 98% of these troubled mortgages have been sold to Wall Street speculators. 

After launching their campaign in September 2014, these grassroots community groups have been relentless in their effort to get HUD, Fannie Mae and Freddie Mac to prioritize non-profits over speculators in their sales of troubled mortgages.  

Leaders of the Center for Popular Democracy and Local Progress successfully enlisted the support of cities and Members of Congress, found a champion in Senator Elizabeth Warren and took to the Internet to build mass public support.

Some highlights of this campaign include:

• September 9, 2014:  Community groups launch campaign and release report: Vulture Capital Hits Home: How HUD is Helping Wall Street and Hurting Our Communities
• June 16, 2015:  Community groups release next report, Do Hedge Funds Make Good Neighbors?  How Fannie Mae, Freddie Mac and HUD are Selling Off Our Neighborhoods to Wall Street
• June 22, 2015:  U.S. Conference of Mayors passes resolution that was co-sponsored by 17 Mayors from across the country
• September 30, 2015:  Community groups and local elected officials converge in D.C.  Rally with Elizabeth Warren and Congressman Capuano, and meetings with senior officials at HUD and FHFA. Warren Demands HUD Curb Sales of Sour Mortgage Loans to Private Equity (Bloomberg); Senator Elizabeth Warren to Join Call to Alter Sales of Distressed Loans (New York Times)
• October 6, 2015:  The New York Times editorial board says these sales should be suspended until government agencies put real reforms in place and actually increase the proportion of nonprofit buyers.
• March 1, 2016: Letter sent to HUD and FHFA signed by 45 Members of Congress.
• April 7, 2016: Rep. Grijalva's letter to Sec. Castro.
• April 2016: National online groups collect over 100,000 signatures on petition focused on Secretary Julián Castro, head of HUD. The coalition website.

The persistence of these community groups has paid off, and the major changes announced today are proof of their hard work. This campaign proved particularly timely as prominent Wall Street speculator Blackstone has recently become the largest single family landlord in the country. With more homes in the hands of non-profits instead of Wall Street speculators, communities will gain further control over their neighborhoods and be less at the mercy of Wall Street. Leaders from the Center for Popular Democracy and Local Progress plan to continue to apply direct pressure on HUD on this issue, and continue the fight for housing justice and community control to strengthen and protect neighborhoods across the country.

Maurice Weeks, Housing Coordinator at Center for Popular Democracy, released the following statement:

“These recent HUD changes move in the direction of common sense policy. We shouldn’t be handing over our neighborhoods at bargain basement prices to Wall Street! I am so grateful for the thousands of community members who pushed HUD to make these changes.”

Jean Sassine, NYCC Community Leader and Board Member, Queens, NY, also released a statement:

“There is still so much that needs to be done, but I’m glad we were able to win these major changes to the DASP program. It will take more to fix the damage Wall Street has done to communities of color, but this is a step in the right direction.”

Jose Vega, ACCE Community Leader, Contra Costa, CA, also released a statement:

“HUD’s bulk mortgage sale program has been fueling the speculator buy-up of our neighborhoods. Finally, HUD is making changes to this mortgage sales program that better prioritize what our communities need – saving more homes from foreclosure and creating more affordable housing.  It’s about time!”

John Avalos, San Francisco Supervisor and Board Member of Local Progress, also released a statement:

“Cities around the country have been frustrated by a lack of meaningful support from HUD in our foreclosure prevention and affordable housing programs. So it’s a real relief that HUD is going to work more collaboratively with local government and local leaders to make a plan for these troubled mortgages.  Up until now, I feel like HUD’s mortgage sale program has been doing more harm than good to our communities.”

Matt Nelson, Managing Director at Presente.org, also released a statement:

“This is an important victory for Latinx homeowners and others impacted by the predatory practices of big Wall Street banks and it wouldn’t have happened without fierce and courageous advocacy — including from thousands of  Presente.org members — that challenged and held accountable a prominent Latino leader. Now, more than ever, government and private sector leaders must be aggressively held accountable to the interests of Latinxs and other marginalized communities. We know from experience that if we do not demand this accountability, our interests will not be represented. We also know that when we do advocate for our interests – directly, forcefully, and persistently – we can achieve great progress.”

Spokespeople are available for media interviews in English and Spanish.

www.populardemocracy.org

The Center for Popular Democracy promotes equity, opportunity, and a dynamic democracy in partnership with base-building organizations, organizing networks and alliances, and progressive unions across the country. CPD builds the strength and capacity of democratic organizations to envision and advance a pro-worker, pro-immigrant, racial and economic justice agenda.

www.localprogress.org

Local Progress is a national network that supports, connects, and unites progressive local elected officials and allied organizations from across the nation. We are driven by a commitment to a strong middle and working class, equal justice under law, sustainable and livable communities, and government that serves the public interest effectively.

For more information, contact:

Amy Schur, aschur@calorganize.org, (213) 804-3161

Maurice Weeks, mweeks@populardemocracy.org, (404) 623-4010

Dan Morris, dlmcommunications@gmail.com, (917) 952-8920